The EEF Skills Report 2016 shows firms’ plans to ramp up productivity improvements and to capitalise on Industry 4.0 – the digital industrial revolution – could be derailed because the UK is struggling to provide the right quantity and quality of skills to meet the sector’s needs.

And with demand for skills set to rocket over the next three years, the situation is about to spiral further, the manufacturers’ organisation EEF has warned.

The Skills Report shows 72% of firms are worried about how this demand is going to be met and 73% of companies have faced difficulties recruiting skilled workers in the last three years

Manufacturers say they are challenged by both the quantity and quality of candidates, with firms regularly forced to contend with a lack of technical skills (67%), an insufficient number of applicants (64%) and a lack of relevant experience (61%).

Meanwhile, statistics from the UK Commission for Employment and Skills (UKCES) show that the number of ‘hard-to-fill’ vacancies in manufacturing remains stubbornly high at 35% - unchanged from 2013 and worse than in 2011 when it was at 30%.

The Employer Skills Survey, published by UKCES, found there are currently more than 27,700 job openings in the North East and nearly 7,000 are difficult to fill because of a lack of skilled recruits.

EEF said the situation is set to deteriorate even further, with almost six in ten firms expecting to need more people management, leadership and production-related technical skills over the next three years alone.

Increases in demand for craft and technician, sales and marketing and IT and software skills over the next three years show how manufacturers are looking to make strategic hires to drive forward their ambitious productivity and growth plans.

However, this places greater pressure on an already diminished skills pool, leaving 72% of manufacturers concerned about accessing the skills their business will need between now and 2019.

Firms are offering a raft of incentives in a bid to overcome the challenges they face and attract and keep highly-skilled employees, with 84% offering competitive salaries, 50% training, 43% flexible working and 49% giving opportunities to work in other areas of the business.

Apprenticeships are also seen as a critically important way for firms to help close the skills divide and 79% plan to recruit manufacturing and engineering apprentices in the next 12 months.

The report claims the Government has largely left manufacturers to try to soften the impact of the skills crunch on their own. At the same time recent policy changes, such as the National Living Wage, the apprenticeship levy and the proposed immigration skills charge, have added to the sector’s burden.

A series of recommendations are made in the report, including scrapping the proposed immigration skills charge and introducing grants to tackle under-representation in apprenticeships. EEF also says the Institute for Apprenticeships should identify gaps in provision and capital funding for Further Education and the roll-out of National Colleges should follow employer demand. Long-term, it recommends targets for secondary schools for the number of Key Stage 4 pupils going on to apprenticeships.

Liz Mayes, North East Region Director at EEF, said: “Despite multiple warnings about the UK’s yawning skills gap, the dial hasn’t moved since 2012.

“Manufacturers continue to struggle to find the right people with the right skills – undoubtedly this has led to lost opportunities for employers, would-be employees and the UK economy.

“Had manufacturers not already been taking action we would arguably already be over the cliff-edge and not just approaching it.

“But this report contains a clear warning – we are just about treading water today and the struggle is only going to get harder.

“The demand for skills is going to soar in response to manufacturers’ productivity plans and their ambitions around Industry 4.0. Getting the right quantity and quality in place will be critical, which is why we are urging the Government to take firm action now.

“Government must match the ambitions of industry and ensure that the education and training system delivers the skills that employers require. Policies must help, not hinder firms.

“They should provide support, rather than hitting employers with additional costs that could potentially hold them back.

“Above all, an April 2017 start date for the apprenticeship levy is looking increasingly ambitious. A patched and piecemeal implementation will cause complexity and confusion for employers, apprentices and providers alike. Without a single, coherent levy platform ready well before April 2017, the levy launch risks sinking.”